TCS Q3 profits beats St on strong digital revenue

The Mumbai-headquartered company has stated that it wants its margins to remain in the 26-28% rangeJochelle Mendonca | ET Bureau | January 13, 2017, 08:00 IST

Tata Consultancy Services (TCS), India's largest IT outsourcing company, reported third-quarter revenue that beat analyst expectations and the company said it was committed to its targeted margin despite the expected increase in visa costs.

Analysts have said that IT industry margins could take as much as 300 basis point hit if restrictive clauses are introduced onto the H-1B visa, a type of work permit on which the sector is dependent. Earlier this month, two US Congressmen introduced a bill to raise the minimum pay for those on the visa to $100,000 per annum from $60,000 currently.

“I believe there will be US visa and regulatory changes -whether the rise in the visa fee or in the number of visas we get. Last year we decided to operate in a visa constrained regime and we have made those changes. But we remain committed to our margin band,“ N Chandrasekaran, CEO of TCS said in a post-earnings press conference.

The Mumbai-headquartered company has stated that it wants its margins to remain in the 26-28% range.Maintaining the margin band is a positive sign for analysts, who had been hoping that the IT company could absorb the costs without hurting its profit. Chandrasekaran said the company was balancing its use of the visas by hiring more talent locally in the US and using its near-shore and global delivery centres.

For the third-quarter, TCS reported revenue of $4.38 billion and net profit of $1 billion. Revenue rose 2% in constant currency sequentially, beating analyst estimates of growth of about 1.5%.